MPAA's Bogus 'Piracy' Numbers Mean It Thinks Downloaders Would Buy 200 More DVDs Per Year

from the fictional dept

Over the years we've had plenty of fun with the MPAA's bogus use of stats when it comes to "piracy" claims. They're really laughable, and it would actually be kind of funny... if policy makers and the press didn't actually believe those numbers and pass bad legislation based on them. Even the one time that the MPAA admitted its piracy stats were totally wrong, it was too late to stop a law that was passed on the basis of those bogus numbers.

Now, you may have seen an MPAA inforgraphic (pdf) that's been making the rounds for a couple weeks now. It's so chock full of debunked stats, they should throw themselves a party for how much falseness they can shove into a single graphic. Going through and debunking the various numbers yet again (most have already been debunked in the past) didn't seem worth it, but furdlog points us to a wonderful debunking on a movie review site, where someone actually does the math, and realizes that if the MPAA's numbers for "losses" are accurate, it means that your average downloader would be buying 200 more DVDs per year. Yeah, for the MPAA's numbers to make even a tiny bit of sense, downloaders would be buying new DVDs more than every other day.

So according to the MPAA, piracy cost them $58 billion last year, making movie piracy a bigger industry than the GDPs of 10 American states. To put it even starker perspective, look at it this way. The film industry gets about $10 billion from the box office, and about $30 billion from the after market of DVDs, streaming, etc. So they’re claiming that piracy costs them almost two-thirds of their business. At $10 per DVD, every household in the United States would be buying an additional 50 DVDs per year if they weren’t so busy downloading. The technical term for a statistic like that is “fictional.”

See, they also claim that 29 million adults have ever illegally downloaded a film. But since that’s only 13% of the adult population, it makes the figure even more absurd. By their own estimate, those adults in question would have on average purchased an additional 200 DVDs each year if only they were still on dial-up. The problem with these absurd figures pulled out of the air, is that even if they are an accurate measure of how many movies are being illegally downloaded, it is not a measure of loss. As has been argued countless times, a bunch of zeros and ones do not cost the industry a dime unless they actually represent something that would have been bought otherwise. Anyone think the average downloader would actually have bought 200 more DVDs? Hell, are there even 200 new DVDs released per year?

And yet, the press and politicians still quote these numbers as accurate.

The math is off because it assumes that the entire market is "buying DVDs", which is just not the case.

Consider all the people who download instead of paying for cable, or download instead of paying for Netflix, or download instead of renting. All of those are revenue streams that are not direct "buying 200 DVDs", but they are consuming. Companies such as Netflix, HBO, PPV, and streaming companies pay top dollar for content. But if fewer people are paying for their services, and more are obtaining content illegally without paying, they pay less for the content.

Just trying to convert a number into DVDs is a strawman at it's finest.

you know the rules. bullshit baffles brains every time! it goes to show what these absolute idiots are lacking, doesn't it? where the hell do they think ordinary people will get an extra $80-$100 from? and that's on top of what the industries assume is being spent already (how much?). would have thought that food, cloths, mortgage and utility bills were priorities, not buying dvds. they know the answer to their problems but refuse to admit it!

Come on, Masnick, is this the best you can do? Quote a bunch of times where they've been proven wrong? How do you know that this time, out of all the other times, they're not actually correct? Everyone deserves a second...third...fourth...um...how many times has it been now?

There are well over 200 movies released each year if you include porn. But that raises an interesting question. What percentage of the downloaded movies are porn? My guess is that the majority of illegal downloads are porn by a fair margin.

So, by MPAA logic, fighting piracy in the porn industry should sell more porn. Therefore when your typical conservative, bible-thumping congressman votes to fight piracy, he is really voting to support porn. I hope they remember that when the vote come up on Protect IP.

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You're actually right. So as to not bias the number too much, let's lop off 50 DVDs right from the top. So, instead of turning to copyright infringement, these people would be buying only 150 new DVDs. While we're at it, I'm not sure I agree with the $10/DVD price point- let's bump it to $20/DVD instead. So, instead of 150 DVDs these people should be buying, they're only buying 75.

That's a DVD every 5 days (roughly)

Even when we drastically reduce the number, it's still nonsensical. One day, when you're no longer paid to type this crap, you're going to look back and wonder how you managed to type it without a resulting nosebleed.

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Do the maths again then! Even with your revised assumptions it doesn't add up - in fact the figures are expressed as money - so they inevitably add up to the same sum of money.
$58 Billion/ 29 Million people =$2000per head regardless of your point. The fact is that few people have a spare $2000 a year so you fail whichever way you choose to look at it!

It gets worse

I our country that would mean we would be buying 250,000 dollars of media every year if you account for the difference in GDP per income.

But none of this is surprising, there is a reason they call it "Hollywood Accounting"
They make millions on a movie, they claim it made a loss of millions!? Some cunning bastards they are I tell ya. Bleeding the world dry while riding on their yachts.

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By your logic then, those people need to be watching a movie more than every-other day. That has never been the case fr most people I'm sure, and doesn't change the fact that reported 'losses' are at the very least wildly off.

Figures don't lie, but liars figure

I guess even that old saying is wrong sometimes, especially when the figures are lies. Even if you go with every household would have to buy 50 MORE DVDs per year, these stats are ludicrous. I don't know anyone who buys a DVD per week so there is no way they are going to start buying 1 more per week for a total of 2 or more. Who does that? Seriously?

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Netflix is mostly a transference, from what I can see in their press releases so far. You have people who were taking movies via the mail turning into movies via the internet. So a part of it (and likely a big part) is just people moving from one medium to another, not a doubling of viewership, example.

It also doesn't matter what sort of services you offer, the "i will never pay for it" crowd just keeps on pirating, and keeps on convincing paying customers to stop paying.

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"There are well over 200 movies released each year if you include porn."

You don't have to include porn, just include direct-to-DVD and cable/TV movies. Boxofficemojo lists 150 movies released in 2010, and those are just the ones that got a US theatrical release. Porn and foreign releases could probably bump that number up to 4 figures (but, of course, the MPAA doesn't count them in its thinking). Then you have all the DVD re-releases and the movies that Hollywood aren't interested in making available (Nightbreed director's cut, I'm talking to you)...

Re: Figures don't lie, but liars figure

It depends on when people can get them at Walmart for $9.98 a disc.
Then you need to wait for the 14 different versions they release.
Then you need to decide to buy into Bluray to get the extra super duper exclusive content we only put on the Blueray copy.

One wonders if they want to declare NetFlix as a rouge site and for everyone back to using VCRs.

I have a DVD collection of nearly 800 titles, collected over a period of about 8 years. So on average, I buy 100 DVD's per year. Most of them in discount stores for EUR 5 or less. I rarely spend more than 10 Euro on a single DVD, unless I really want to see that movie.
To be honest, I reserve about 50 Euro per month for new DVD's and since I have a nice income and no big expenses, I can easily set aside that much.
If MPAA thinks I'm willing to buy twice as much DVD's then they'd first have to lower the prices a lot! About half their current price, I'd suggest. Then it still fits within my budget. :-)

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You're right - the math is off. Let's use numbers straight from the infographic from the MPAA:

- Of the $58 Billion in lost economic output, they claim $16 Billion in lost earnings
- Immediately under that, they state that nearly 70% of film revenue comes from "DVD sales and other after markets".

70% * $16B = $11.2B

However, the $10 number is off too - that's a possible retail price. I'm pretty sure Wal-Mart doesn't pay $10 per disc. Last I checked with a friend who is a buyer for a chain store (500+ stores), they paid closer to $5 each.

As a big film buff who watches a lot of movies (and almost exclusively movies) I barely manage to get through about 200 films a year (yes, I keep track). My behavior is not average - not even above average - there are very few people who watch movies as often as I do. I suspect the average is one a week, about 50 movies a year.

How much do I spend on movies each year? $155.04.

That's what Netflix costs me. I also get movies at my local library for free. No cable TV, no movie theatres, no DVD purchases, no Redbox, no video stores.

If a devoted film buff can get by on $155 a year, why should anyone else pay more?

"99% of files found on bittorrent were found to be copyright infringing"

First of all, this is a total lie since the study was done based on "in our opinion is *likely* infringing", not "we found to be infringing" so they need at *least* a likely in there for that sentence to not to be a lie.

In the caveat, they mention that they assumed the files were infringing unless they could show they weren't so if they have no clue, they are automatically "likely infringing", so I guess thats why it's so high but anyone who has lost or broken their windows CD should know that the trojans, fake files, viruses and spam alone will account for a good deal more than 1% of the stuff on there.

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No one is campaigning for illegal downloads except for the legacy distribution industries. They are telling people to pay up or else and people don't like it.

When I took 2000 vhs taped to the local library and donated them because I could get a better picture on a dvd I decided I was not going to be fooled again. I have maybe 10 dvd's in my home. I joined Netflix when I bought my first dvd player. I cancelled this month because they doubled my price in a crappy economy.

I watch OTA TV when Amazing Race is on. I can watch Hulu if I want and I'll either let the kids redbox Harry Potter when it comes out or I'll find a torrent.

You did this with your unadulterated greed. It has been pointed out here countless times people will pay up until a point. You and your handlers keep pushing people past that point.

News flash when someone has a bad experience with a business how the company handles it determines the relationship going forward. When you treat you customers poorly or worse treat them like criminals don't expect a lot of loyalty.

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"Netflix is mostly a transference, from what I can see in their press releases so far."

Do you have examples? Most of the stuff I've been reading is about how they're expanding internationally to countries they couldn't possibly serve physically, and people complaining about the lack of streaming titles. The pricing has certainly seemed to split people recently, but my impression is that the streaming attracted a lot too (only to be put off by the relative lack of choice, but that's another argument).

"It also doesn't matter what sort of services you offer, the "i will never pay for it" crowd just keeps on pirating"

You're correct here, but why focus your business tactics on attacking those people rather than addressing the needs of people willing to pay? My experience with DRM and other restrictions is that it makes me less willing to buy, and does nothing to stop those who won't buy anyway from pirating.

"and keeps on convincing paying customers to stop paying."

Again, I'm not entirely sure you're correct here, but I'd suggest it's the artificial restrictions on legal content that makes people switch. Say to someone "hey, here's free, quick download you can play anywhere instead of that $20 DVD with the unskippable ads you can't buy for another 3 months", and it's not just the "free" part that attracts people...

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Yeah, I don't think they take into account those who may pirate things they already paid for becuase the paid version sucks or just plain lack features present in the pirated version. For example: paper mario with HD textures and online play for smash 64 are only possible with unautorized copies.

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I'd hate to think how much I've spent, but I keep a log of which movies I watch (sad, but helps me with yearly top 10 blog posts and the like). Also a heavy movie watcher, I've had a relatively light year and watched 167 movies so far, and that includes 2 movie festivals I've attended with a total of 29 movies watched between them.

I don't include movies I've seen previously in that figure, but I certainly doubt the average person watches that many. Even if they do, I'd bet vital organs that most of them only do so because they're on TV and they can't be bothered to turn over, rather than anything they'd think about and pay for.

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It was assumed. They started with the assumtion that all files were "likely infringing" and moved them into "likely non-infringing" if they found they met certain criteria:
"We classified a file as likely non-infringing if it appeared to be (1) in the public domain, (2) freely available through legitimate channels, or (3) user-generated content. These were judgment calls on our part, based on the contents of the files, together with some external research."

The anonymous commenter at #2 makes a reasonable point—that there are increasingly many ways to consume paid video content other than "buying DVDs"—but I suspect that this is a point that cuts against the industry's attempt to inflate the loss estimates, which so often do assume downloads are substituting for disc sales (as opposed to, say, a Netflix streaming subscription that runs $8/month however many movies you watch).

But of course, many of those downloaders are actually already paying for Netflix or cable, but looking for the pirated version of a movie that isn't yet available as part of their paid service. I suspect the net loss to the film industry from *these* downloaders is in many cases pretty close to zero, because their alternative to downloading would not be making an additional purchase, but rather watching one of the thousands of other movies that are already part of their paid plan. (Or borrowing a DVD from a friend. Or watching something free-with-ads on Hulu or Snagfilms or YouTube.) A realistic cost estimate require a realistic assessment of the likely substitutes for the pirated product.

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This makes no sense does it?
"We classified a file as likely non-infringing if it appeared to be (1) in the public domain"

So if its not its automatically not allowed to be shared?

"(2) freely available through legitimate channels"

I'll ask again:If its not its automatically not allowed to be shared?

"(3) user-generated content"
What user? User of what? A program? A video editor? User of the internet? And if it is does that mean user-generated content isn't artistic expression and subject to copyright laws? Then in that case any artist (a user of many things) isn't granted a copyright is he?!

Last I checked, for something to be found infringing means the particular instant of copying isn't allowed by the copyright holder right? So I'll ask again: HOW DO YOU KNOW ITS INFRINGING???

Once upon a time, 2+2=4. Now it all depends on how it is presented in statistics.

Well - see if you write it on a chalk board, it would still stand that 2+2=4.

But the RIAA and MPAA way of looking at it is for each person that *thinks* about 2+2 equaling 4, that's a lost number. So therefore in RIAA/MPAA mathematics it would go like this:

In the Hypothetical Classroom there are 30 students.

The teacher writes 2+2=4 on the board. But since Sandy, Jen, Billy and other other 27 students also thought about the equation - or potentially thought about it (this math ignores uninterested persons) you also have to add 4 for each of them.

So... 2+2=4, now add 4 for each of the 30 students and 4 once more for the teacher.

There are not more than 2 or 3 movies a year at best of interest and well done. No matter how you slice the pie in that, there isn't 200 dvds nor the value of 200 dvds in money in that interest. Changing the price, changing the figures, even totally eliminating piracy will not change what I am interested in. Reruns, B grade movies, and remakes, will not get me buying more.

I am surprised the **AA apologists are even attempting to defend what has been shown over and over to be piracy wide tactic to inflate the numbers and lie their asses off over it. There has just been too many years of it and too many years of slimy tactics displayed that show they will do anything for money. Morals have no place beside greed in the entertainment industry.

Re: lost earnings ≠ lost economic output

Thats cuz of the 10$ for the DVD that is sold, they only put 2.75 or so is put on the books as their income 5 cents goes to the retailer and the rest gets shuffled around to avoid taxes and pretend they are paying the people they are supposed to be paying royalties etc to. :)

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Well the real trouble is they only have 2 categories
likely infringing and
likely non-infringing.
They don't have a category for the unknown amount of the stuff that they haven't got a clue about. There was obviously at least 14% that they were so clueless they couldn't even say what kind of file it was, but who knows who many of the other files they knew nothing about beyond the category.

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First off, you assume that they are buying DVDs to make up the money, and that is a fail. Most people see movies outside of the theater on rentals, streaming, netflix, PPV, or cable movie channel.

Second, the assumption is that a single downloader only represents one consumer. But in a family of four, a single downloader pollutes 3 other people as well. If they "lend" those pirated movies on DVD to friends, they touch an even larger group.

Most downloaders on here will tell you that they have burned discs for family members, etc.

So if every downloader pollutes only 1 more person, your numbers go from 77 DVDs to 38 DVDs, if you go "DVD only" in the calculation. Your number assumes $385 per person, but assuming some pollution, that number would drop to less than $200 per person. Considering what cable charges for movie channels, that is almost in the realm. Heck, a yearly subscription to Netflix is about in that range.

Note: Before the howls come in of "making shit up", I am only putting out there some suppositions. I am sure that downloader types here will confirm that they have burned discs for others, which is a clear indication that the "number of downloaders" isn't exactly a true indication of the extent of piracy. To make an assumption on nubmers like that is to create an incredibly huge strawman, and to ignore the realities of the piracy world.

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Don't make me laugh!

The numbers are still ridiculous even if we take all your rubbish at face value.

The fact is that there isn't a spare $58Billion (ie more than doubling their revenue) in the US economy that can go to the MPAA organisations. It doesn't matter how you dice it up - its just plain ridiculous.

One aspect of this infographic that may be causing some confusion is that the $58 billion figure represents (or rather, is claimed to represent by an economic retaiend by the copyright industries) is the overall loss of economic output to the U.S. economic due to copyright piracy in general. One can complain that that claim is inflated (and one should!) but the claim is with respect to piracy across a variety of industries, and a variety of forms (online, burned DVDs, etc.) The figure claims to measure losses to the US economy, but is based (or again, purports to be based) on piracy occuring not only int he US but around the world.

The bottom line is that the study, flawed as it may be, is not claiming that the movie industry alone suffered economic losses of $58b as a result of infringing downloads by US adults, which is where the Pajiba piece's "this would mean every downloader would be buying 200 DVDs" argument comes from. Sadly, it looks like the Pajiba comparison suffers from the same sort of flawed reasoning as the MPAA's economic loss claims it is attacking.

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I am going to reiterate a few points already said, but the movie industry is not doing a very good job at keeping paying customers honest.

Of the last 10 DVDs I got from Netflix, I was only able to skip ads on 2 of them. One of those 2 I was able to skip previews to be presented with an anti-smoking ad right before the menu. So I guess it really shouldn't count. So only 1 out of 10.

On top of that we have limited streaming options. Starz pulling out of Netflix in the hopes of getting more revenue elsewhere. Syfy and other NBC owned stations either not streaming or waiting months to stream their tv shows. Region restrictions, DRM etc.

All this stuff does not make people enjoy paying for movies and tv. it ticks them off.

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I don't know how you did it, but after reading your comment a couple of times, my brain actually physically hurt. I mean it, I felt real pain, in trying to figure out how 2+2=128! Congratulations man, you've proven that mathematics is dangerous to your health!

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"Companies such as Netflix, HBO, PPV, and streaming companies pay top dollar for content."

And they pay the same to the MPAA regardless of how many people pay them, so the people who download instead of use Netflix aren't considered a 'loss' to the MPAA in this sense. They are considered a loss, because that pumps up the numbers, and in order to make the numbers look good, you have to assume that they would have bought a DVD at the price of 3 months worth of Netflix... This strawman is even bigger than it looks at first glance.

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Re: Re: Re: Figures don't lie, but liars figure

Nah, they'd never want people to go back to using vcrs
remember "the VCR is to the American film producer and the American public as the Boston strangler is to the woman home alone" (Jack Valenti 1982)

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"Most people see movies outside of the theater on rentals, streaming, netflix, PPV, or cable movie channel."

Last time I checked, all of those are paid for. Some people will even pay multiple times (e.g. rent or catch it on TV then pick up a DVD later on).

"But in a family of four, a single downloader pollutes 3 other people as well. "

The same is true of legal content. One purchaser will show content *for free* to other people in their own family! You wouldn't suddenly make 4 purchases if the pirate copy wasn't available. You wouldn't sell 4 Netflix subscriptions. I'd think about your own maths, as that seems to be faulty itself in this light.

"If they "lend" those pirated movies on DVD to friends, they touch an even larger group."

Don't people lend legally bought DVDs any more? News to me. My God, shut down Walmart because every DVD they sell is "polluting" people who haven't paid!

"Note: Before the howls come in of "making shit up", I am only putting out there some suppositions."

As are the MPAA. That's why it's so worrying when people start treating them as facts.

"To make an assumption on nubmers like that is to create an incredibly huge strawman"

Indeed, that's the point of the article you're responding to - to point out the strawman that is the MPAA's argument.

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You're falling into the same trap I did with some of my assumptions above. (Even though it lead to the same result: these numbers are ridiculous!)

The MPAA didn't say anything about number of downloads *or* number of DVDs; They said piracy resulted in a "loss" of 58 Billion. Other people are then using those numbers to (maybe a little hyperbolicially) show "real world" examples of how ridiculous these numbers are.

It's funny that you point out the "ripples" that can be involved with downloading (you're correct that DVDs probably get burned for friends/family) but you ignore the positive ripples that are just as likely.

So, I leave you with this: To make an assumption on numbers like that is to create an incredibly huge strawman, and to ignore the realities of the real world.

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But they're basing all their numbers on the downloading numbers and working their way out from there. If they included the polluted numbers you propose, then the $58 billion would be quadrupled (since the numbers you propose don't include normal borrowing of legal media and the MPAA would agree with you).

Plus those numbers are bullshit to begin with. They double and triple count the same dollar as it makes its hops.

Re: Re: Re: Re: Figures don't lie, but liars figure

Actually they do.
VCRs ate tapes that needed to be replaced, DVDs can last for a long time. (unless they use the ink that eats the discs again)
VHS retail pricing was huge, because it was big, bulky, time consuming.

And once they got past the whole Boston Strangler phase, they were enjoying lots of profits. They turned the evil thing into a collectable and drove people to pay more for something.

Re: Re: Re: Figures don't lie, but liars figure

Second, the assumption is that a single downloader only represents one consumer. But in a family of four, a single downloader pollutes 3 other people as well. If they "lend" those pirated movies on DVD to friends, they touch an even larger group.

Most downloaders on here will tell you that they have burned discs for family members, etc.

And people that buy them do that differently? So should that even be factored in?

Thing is - if I can buy a movie for $20.00 and only have $20.00; then I'll buy a single movie. Doesn't matter how many movies I want or anything else - I'm financially limited to one movie.

If I can download free, I might get 15 movies. But if I had to pay for each download, I might not get any. It's a severe misconception that a single download is a lost sale, much less 3 or 4 lost sales.

Personally, I pay enough for cable that I have all the on-demand I would ever want, plus I prefer to watch movies on my TV in the living room, not on the PC. Converting movies to playable format from the web is too much of a pain, when I have on-demand just waiting there. I only press a couple buttons, go to my on-demand subscriptions and watch all I want. I pay $200.00 a month for cable and all the movie channels.

So even if I download something that I could watch on-demand - is it really 'stealing'?

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"To make an assumption on nubmers like that is to create an incredibly huge strawman, and to ignore the realities of the piracy world."

Couldn't have said it better myself. Unfortunately for you, however, the numbers you're attempting to defend with this sentiment are what is doing this. You're attempting to say they're absurd as if that counter's Mike's point when in reality Mike's point is that they're absurd.

So is $58 billion absurd or not? You say it is but it's not at the same time, somehow.

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Joe, I don't ignore positive ripples, but often it is hard to find the positive in all the negative.

When someone watches a pirated DVD, do you think they are going to run out and buy a copy of it after watching? Not likely, right? Do you think they are going to run out to the theater to go see it? Not likely. Are they going to pay for it on PPV as a result? Not likely.

Whatever positive that the supporters of piracy point out, it is equally easy to point out the losses. It's net negative for the content production industries. Maybe a positive in other areas they are not part of, but certainly not helping the content producers.

Paul T: The people who legally obtain content get it in that way. If 13% of the population is pirating, and they infect 1 more person each (give them pirated content), that makes 26% of the population out of market. I don't care what anyone will claim, when you marketplace is 26% smaller, your sales will suffer.

You are confusing what law abiding people do versus pirates. Pirates don't pay for cable, they don't pay for theater tickets, they don't buy PPV movies, they don't buy DVDs. They download them, they burn them, they watch them, and they don't pay for them - and they often give them to their friends too.

Most importantly, because it didn't cost anything, they don'
t want the burned disc back, and their friend can pass it on to another friend, sneakernet style. No sense of ownership, no sense of value, no need to worry. If it gets lost in the shuffle, too bad.

Playing the numbers game by dragging things in from different places and trying to make them add up is always fun. It's also in the area of "figures don't lie, but liars can figure". It's a sucker play, and certainly has created a strawman here.

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You said: "Most of the stuff I've been reading is about how they're expanding internationally to countries they couldn't possibly serve physically, and people complaining about the lack of streaming titles. "

When Netflix comes into a market, there is some increase in consumption, but in the end, much of it is just moving from one to another. Remember, people don't suddenly gain a whole bunch of new spare time they didn't have before.

Netflix streaming was built up as a bonus feature to the regular system. Now they are splitting it, will people really pay for both, select one, or drop the other? We don't know. The only think that is certain again is that people didn't suddenly get more spare time, so it isn't like movie consumption will go way up.

As for the "ere's free, quick download you can play anywhere instead of that $20 DVD with the unskippable ads you can't buy for another 3 months", it is a pretty typical answer. Honestly, the rest of it is an excuse for not spending $20. Free or $20, most people will choose free, even if the free choice in the the long run will hurt their ability to get more product.

Put another way, movies aren't suddenly going to drop to $5 for a DVD. There just isn't 4 times more market at that level. Thinking that DVDs will price down to where they can compete with free is very unlikely, the economics are just not there. Even with streaming and the old "infinite distribution", the question is one of the bottom line: How big is the potential market, and is it worth dropping the price?

It is simpler to think of it in terms of say a UFC PPV. At $50, it's a steep price. But the buy rates are there. If they move the price down to $25, will the buy rate more than double (because costs will be a bigger part of the bottom line result)? I know that people much smarter than either of us have tested it out, and the answer typically is no. That is on a truly scarce good (live event).

Mike could explain it all of the economics to you in much more detail (and point out which class he learned it all in), but that line of thinking and reasoning doesn't line up with where he wants this all to go, so no dice.

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Well, consider the terms:

58 billion in economic output is lost.

That isn't 58 billion in sales.

Even Mike knows that money "echos" inside an industry. 10 billion in sales, example, might lead to that level of economic activity. After all, the money comes in, it is then used to hire the workers, buy the equipment, rent the locations, whatever. In each of those cases, that money then turns again, and so on.

The general argument would be that money not spent on movies is spent somewhere else, and that would be true. However, in terms of an individual industry, with less money in, there is less money spent, less consumed, and as a result, there is a shift.

So you see, the number is even more of a strawman because Mike (and the author of the quoted piece) both ignored the significant words that appear after the 58 billion. It's really too bad that it is that easy to lead the Techdirt sheep around.

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When someone watches a pirated DVD, do you think they are going to run out and buy a copy of it after watching? Not likely, right? Do you think they are going to run out to the theater to go see it? Not likely. Are they going to pay for it on PPV as a result? Not likely.

Maybe not. (definitely not for PPV, that's a rip off!) However, how many people go on to buy *other* movies/shows? How many stories have you heard like: "so-and-so lent me their Battlestar Galactica Season 1 DVD, and I bought every other season after that, and had to go buy the first season so my collection would be complete." This sort of thing happens, but is completely ignored. You also ignore the fact that people will take something that is free even though they wouldn't buy it for $1. So, not every instance of copyright infringement, no matter the ripples, can be equated to "lost potential sales". The whole argument is a house of cards.

Whatever positive that the supporters of piracy point out, it is equally easy to point out the losses. It's net negative for the content production industries. Maybe a positive in other areas they are not part of, but certainly not helping the content producers.

Are you really going to make me find the links to the studies that show *the exact opposite*? Just do a search on the TechDirt search for "underserved customers" or "spend more". You'll find it. I believe in you.

No sense of ownership, no sense of value, no need to worry. If it gets lost in the shuffle, too bad.

You describe a nightmareish hellscape where everyone has access to their culture regardless of their financial situation-- and frankly, I'm terrified. /s

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"You are confusing what law abiding people do versus pirates."

You are missing one of the major points people like you deliberately ignore: those people are exactly the same people. Few get 100% of their material from sources they've paid for directly, and few pay 0%.

You're missing the point that most people share content, and don't necessarily follow the law when doing so - e.g. copy a CD for a friend or tape a movie from cable then lend that copy out. This predates the internet, and hasn't negatively affected the industry once they stopped whining that VHS was the Boston Strangler and such crap. It's when they tried the Canute act instead of adapting that they started getting into real trouble.

"Pirates don't pay for cable, they don't pay for theater tickets, they don't buy PPV movies, they don't buy DVDs. They download them, they burn them, they watch them, and they don't pay for them - and they often give them to their friends too."

What about the people who buy them then burn copies for friends? Also, what about the friends who like the film and buy a copy later? Pretending that every download is a lost sale for all eternity is part of where these idiotic figures come from in the first place.

I've bought more than one movie that turned out to be a pile of crap and didn't care when a friend lost my copy. Luckily, I don't spend anywhere near full price on DVDs I haven't previewed so it's an easily absorbed cost. My position wouldn't have changed if I'd have pirated, but part of me wishes I didn't bother.

"Playing the numbers game by dragging things in from different places and trying to make them add up is always fun."

Which is presumably why your corporate gods do that instead of fixing their broken business and serve the needs of their customers.

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"When Netflix comes into a market, there is some increase in consumption, but in the end, much of it is just moving from one to another."

Got anything to back that up?

"Remember, people don't suddenly gain a whole bunch of new spare time they didn't have before. "

No, they have a new way of filling that time. Maybe it replaces DVDs, maybe books, maybe videogames, it will change from one individual to the next.

"The only think that is certain again is that people didn't suddenly get more spare time, so it isn't like movie consumption will go way up."

That assumes that 100% of their spare time is spent watching movies. Movie consumption can go way up if it replaces other activities.

"Free or $20, most people will choose free"

All else being equal, perhaps. Perhaps not. The problem at the moment is that the free option is actually *more valuable* right now. I can list many examples where I'm completely unserved by legitimate outlets yet fully served by pirates, and I spend more than the average person on entertainment as it is.

"movies aren't suddenly going to drop to $5 for a DVD"

I just bought 27 DVDs on a trip to London, 18 of which were £3 ($5) or less. The sole reason I picked many of them up was due to their being that price. I only paid more than £3 for the more interesting or better value items.

"Thinking that DVDs will price down to where they can compete with free is very unlikely"

...because they have marginal costs which make that very unlikely. Digital goods on the other hand have no such handicap.

"How big is the potential market, and is it worth dropping the price?"

As I've been saying for over a decade - the market should be worldwide. I still have money in my pocket for a Netflix or Hulu subscription should anyone allow me to pay for one. After that, pricing is down to the market, and the market is saying that the pricing you would make for physical is too high for digital.

"That is on a truly scarce good (live event)."

...which therefore includes large numbers of other factors including transportation, childcare, food & drink, etc. that doesn't factor into sitting on your couch and choosing from a menu. Yet again, ignoring other factors that don't fall in favour of your chosen narrative.

"and point out which class he learned it all in"

You first. Where did you study? What are your credentials? I believe Mike has discussed this for many years, so what's your background?

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"Even Mike knows that money "echos" inside an industry."

Of course, if you paid more attention what he actually said instead of attacking him, you'd know that he's written a number of articles in the past discussing exactly this. You'd also know that he's detailed why these figures are misleading and count each dollar several times as it goes through said "ripples".

Your "insightful" points are actually repeating what's been said before. In fact, I wouldn't be surprised to look back and see that you were attacking him for discussing that back then too. I wonder why you insist on AC postings? It couldn't be so that your contradictions aren't easily tracked, right?

The Next Step

The only thing left to do now is to get a patron politician (Hatch maybe) to grab onto this and declare that the free and open Internet is costing the U.S. jobs and that the key to economic recovery is to give the MPAA everything it wants.

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"Joe, I don't ignore positive ripples, but often it is hard to find the positive in all the negative."

It may be hard for you to see the positives, but that doesn't mean there aren't plenty of them.

"When someone watches a pirated DVD, do you think they are going to run out and buy a copy of it after watching? Not likely, right? Do you think they are going to run out to the theater to go see it? Not likely."

Yes they do! That is exactly what people do if they like what they watched! I commented on this recently:

It is unbelievably stupid to think that unauthorised content doesn't act as promotion for authorised versions or other authorised content. This backwards attitude is part of the reason why content providers' battles against "piracy" have failed so badly.

"If 13% of the population is pirating, and they infect 1 more person each (give them pirated content), that makes 26% of the population out of market."

Wow, twist the language much? "Infected"? Really? So now not only is copyright infringement analogous to murder and robbery on the high seas, it's also a disease that needs to be treated?

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So...

When I have a 'bad experience' at a local restaurant, and I tell 13 friends/family about it, you are saying I just cost that restaurant %1300 of the profit they could have made if I hadn't said anything and 'lost' them 13 sales???

You are right that positives are hard to find in the entertainment industry.... they added color (and only charged us a little bit more), then they added STEREO (and only charged a little bit more), then they added HD (and only charged us a little bit more... for the same content for the third time.....) I'm sure something in this comment could be construed as a 'positive' for the entertainment industry, but your are right, they are difficult to find and way overshadowed by the negatives

I've heard it said that in retail, keeping one customer happy costs less than finding 13 new customers.... What are the **AA's going to do when they run out of 'new customers' because they definitely aren't keeping their current customers happy....

Of course this stat doesn't apply to a MONOPOLY when your customers are forced to pay due to 'you might be a criminal taxes' and 'you heard the song while passing by a business licensing fees'...

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However, in terms of an individual industry, with less money in, there is less money spent, less consumed, and as a result, there is a shift.

When the cost of producing your physical product drops to near zero then there WILL be less money going around in it (piracy or no piracy). 500 years ago agriculture was almost the whole economy - nowadays it is a tiny proportion.

Technological progress makes this happen to every industry in the long run. Any industry that thinks it can buck this trend is deluding itelf!

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Overcast, I think your on the right track, but I believe they are applying a basic high school algebra trick.
Lets start values of one “download” equals one “lost sale”, we have an equation something like this;
X = 1 & Y = 1 where X is the downloads and Y is the lost sale both being in a qty of 1
Therefore we can assume X = Y = 1 or more simply X = Y (hands up if lost you yet)
Now lets start the maths magic machine of the MPAA (patent pending)
(multiply both sides by Y )
XY = Y^2
(subtract both sides by –X^2)
XY – X^2 = Y^2 – X^2
(now Factorise)
X ( Y - X ) = ( Y + X )( Y - X )
(Divide by the common factor of ( Y – X ) )
X = Y + X
Substitute values for X & Y
1 = 1 + 1
Thus
1 = 2 or
one download = one lost sale + one download
now using the proof above we substitute one download with its value and
we then get
one download = one lost sale + (one lost sale + (one lost sale + (one lost sale + (one lost sale + (one lost sale + (…etc))))))
Now this has a fundamental flaw but looks logical, but I dare say they are using this

Maybe this TSA agent needs to let this woman do it to her then maybe she will see things differently. I bet she would think that it is rape. She should absolutely identify her and take a picture then all women can ask for someone else to give them a strip search not a gynecology exam. Was there a doctor present if not then she should at least be charged with practicing without a license not to mention rape and assault. She didn't like being told NO anyway you look at it. NO NO NO NO NO NO!!!!! I wonder if she knows what that means???

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He reported on a 3rd party source. The fact that you always attack Mike directly and never simply point out errors in the source is one of the reasons you always look rather silly. On top of that, you normally respond by making bare assertions yourself that are almost always worse than anything Mike says in terms of factual claims.

Here, you simply have to attack Mike rather than questioning the source, while going off on bizarre tangents about "pirates don't pay for cable" and other things that are just as provably wrong as anything suggested in the article. At least this time you've refrained from directly attacking anyone disagreeing with with you, at least in the posts above this one.

We can agree that the "200 DVDs" figure is hyperbole. But we also have to agree that the $58 billion is equally silly, if not more so. Attacking Mike for not raising arguments he's actually raised in the past (and are mentioned on the 2nd link in the article) doesn't address this.

I wonder...

Does the MPAA consider the sale or barter or giving away of used DVDs and/or watching a movie at a friend's house as theft? It wouldn't surprise me at all if they did. A clerk at Blockbuster once told me Disney won't allow them to sell their used DVDs.

Gotta do more to pump up those phony figures, MPAA, till they're so ridiculous nobody will believe you. Try 50 DVDs per person per day, men, women and infants included, why not?

Re: Is this the best you can do?

Article's number are just as bogus as MPAA's

This helps no one.

It just makes another bullshit case, and we've got plenty of those flying around from everyone who has an interest in this subject. MPAA inflates the impact ridiculously and fanboys that must have their downloads minimize the impact absurdly.

The government

accepts the MPAA/RIAA numbers because the government gets paid to do so. With the DOJ having so many attorneys from (and probably still working under the table) for the MPAA/RIAA, isn't it logical that the government would believe the MPAA/RIAA statistics?

The government

accepts the MPAA/RIAA numbers because the government gets paid to do so. With the DOJ having so many attorneys from (and probably still working under the table) for the MPAA/RIAA, isn't it logical that the government would believe the MPAA/RIAA statistics?

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definitely
I can stream movies to my 360 for a few bucks
but the catalog of available movies pales in comparison to what's available online
as a result I very rarely watch a movie on Zune using my 360 and have to resort to illegal downloading for most of my movies

not saying I would purchase every movie I'd want to watch on zune if they were there
but the increased ease of use that Zune has over illegal downloading would certainly make me think twice

Zune always gives you the right movie in good quality right away
torrents, not so much
I'd be willing to pay for benefits like these

Re: Re: Is this the best you can do?

200 DVDs a year?

I've got a collection of over 1000 DVD titles collected over 10 years. I have a good income and allow myself $100 a month on new / used DVDs. I scour the bargain bins to find hidden gems, hit garage sales and usually buy 6-8 a month. There is no way in hell that even a DVD addict like myself is going to buy 200 DVDs a year.

I'll admit to downloading the occasional movie but usually it's only to see how good / bad it actually is. If I like it, guess what? I buy it. There's at least 200 movie titles in my collection that I got because I downloaded the movie, liked it and decided to purchase it to support the studio. If I don't like the movie, it's deleted and regulated to the internet trash bin where it belongs.

The other movies I download and keep are those that are no longer in print and can't be found anywhere. For example I'll admit to wanting an actual copy of Rhinestone with Sylvester Stallone and Dolly Parton simply because it's a horrible movie, but I can't find a copy for less than $75.00 used and that's way too much to pay for cheese. As a result, I downloaded a copy. Same goes for a lot of other movies that I would willingly pay for provided there was a legal way to pay a reasonable price for them.

The MPAA needs to work with people to provide us with solutions that will help everybody. I'd be willing to pay a small fee for a downloadable movie with no extras that I could burn and watch whenever I wanted. Until the MPAA comes out with something like that, I will download and continue to buy the movies I feel are deserving of it.

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Actually you are wrong. The calculation is entirely accurate since "Companies such as Netflix, HBO, PPV, and streaming companies pay top dollar for content" have a set licensing deal in place that is not dependent of the number of external users who consume this data. This value is fixed and should not even be a part of this discussion with regards to the MPAA.